What typically characterizes a short sale?

A short sale is typically defined as a sale where the property's selling price is less than the total amount owed on the mortgage. This situation occurs when a homeowner is unable to continue making mortgage payments and seeks to sell the property, but the sale price is insufficient to fully cover the remaining mortgage balance. The lender must approve the short sale, as they will not receive the full amount owed on the mortgage. This process can help the homeowner avoid foreclosure and minimize the impact on their credit.

In contrast, a sale requiring the owner to pay off their mortgage in full would not be considered a short sale, as it does not involve selling for less than the mortgage balance. A sale involving multiple buyers competing for the property typically suggests a more favorable market condition and does not align with the characteristics of a short sale, which usually indicates financial distress. Lastly, while real estate agents may play a role in promoting short sales, this is not a defining characteristic of the transaction itself. The essence of a short sale lies in the financial situation surrounding the mortgage, specifically the discrepancy between the sale price and what is owed.